(Reuters) The dollar slid to two-week lows on Thursday, with safe-haven demand for the currency waning as investors grew optimistic about progress towards a U.S.-China trade deal and agreement on Britain’s exit from the European Union.
Sterling jumped to a two-week high versus the dollar and posted its largest daily percentage gain in seven months.
“With a Brexit deal looking more likely and U.S.-China talks showing more progress, it’s just clear that the dollar is losing some safe-haven demand,” said Juan Perez, senior currency trader, at Tempus Inc in Washington.
On Thursday, Irish Prime Minister Leo Varadkar said a Brexit deal could be clinched by the end of October to allow the United Kingdom to leave the European Union in an orderly fashion, after what he called a very positive meeting with Boris Johnson. Ireland is at the center of what has been a prolonged Brexit impasse.
“Both prime ministers came out with the most hope in a while,” said Tempus’ Perez. “The move in the pound of more than 1-1/2 percent in its favor makes sense … but the key is can parliament pass this Brexit deal if it does happen.”